An iterative auction for carrier collaboration in truckload pickup and delivery

While carriers can collaborate to reduce empty traveling miles in truckload shipping, this is difficult to realize because each party is self-interested who may not share his private information that is necessary for the cooperation. In this paper, we propose an iterative auction scheme, which enables carriers to collaborate by exchanging their shipping requests iteratively. The auction is shown to be incentive-compatible, individually rational, budget balanced, monotonic, and convergent. Computational experiments indicate that it has small efficiency loss and can significantly improve carriers' profits. We also develop two acceleration methods and extend the auction to more general problems.